United Parcel Service (UPS) is a delivery giant currently navigating a challenging landscape, leading to questions about whether the stock is undervalued in 2025. One significant factor impacting UPS is Amazon’s strategic shift to reduce its reliance on third-party carriers and bring more of its delivery operations in-house. This has resulted in lower package volumes for UPS, putting pressure on its revenue and profitability.

In response, UPS is focused on rationalizing its network capacity and optimizing its operations to reduce costs. The company is also exploring new growth opportunities in areas such as healthcare logistics and e-commerce fulfillment. However, these initiatives may take time to fully materialize and offset the impact of Amazon’s changing relationship with UPS.

Despite these challenges, UPS has a strong brand reputation and a well-established global network. The company also has a solid financial position, with a history of generating consistent cash flow and returning capital to shareholders.

The longer-term upside opportunity for UPS lies in the potential recovery of business-to-business package activity. As the global economy rebounds, demand for B2B shipping is expected to increase, which could drive revenue growth for UPS.

Morningstar’s fair value estimate for UPS suggests that the stock may be undervalued at its current price. This presents an intriguing investment opportunity for those who believe in UPS’s long-term growth potential.